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TMI Blog2018 (4) TMI 1894X X X X Extracts X X X X X X X X Extracts X X X X ..... case on hand, no service tax was collected, but the appellant is compelled to pay and thereafter, to get the same reimbursed. Appellant need not be mulcted with liability to pay service tax, which they have not collected from the Government / Tamilnadu Housing Board, and consequently, to pay the same to 1st respondent. Intention not to collect service tax from government for sovereign functions, is the main issue and that is why exemption has been granted earlier. Appellant is entitled for an order of interim injunction - appeal allowed. - W.A. No. 756 of 2018 And CMP No. 7173 of 2018 - - - Dated:- 24-4-2018 - Mr. Justice S. Manikumar And Mrs. Justice V. Bhavani Subbaroyan, JJ. For the Appellant : Mr. N. Subramanian For the Respondents : Mr. Rajnish Pathiyil (for R1 to R3), Sr. Central Govt. Standing Counsel, Mr. RP. Prathap Singh (for R4 to R13). JUDGMENT (Order of the Court was delivered by S.MANIKUMAR, J.) Appellant is a contractor carrying on civil works, since 1987. Appellant has entered into works contract with Government of Tamil Nadu through respondents 5 to 15 for carrying out several construction and other works. Between 2015 and 2016, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mended those services are taxable and you are liable to pay service tax on the concerned contract receipts. The details of such taxable services are given below:- Para 1 : Non-payment of Service tax - ₹ 3,01,600/- under Works Contract Service. On verification of your ST3 for the HYE September 2015 and March 2016 and records submitted by you for Detailed manual scrutiny, it is observed that you have constructed protective wall arrangement to Anna University Engineering College at Pullangudi by entering into agreement with Department of Technical Education, PWD vide agreement No.:DB/D.O.IV/T.NO:20/2015- 16/TEC/Dt.01.10.2015. But you have not paid service tax on the Contract receipt of ₹ 52,00,000/- On enquiry, you have stated that you are claiming exemption under Notification No.25/2012-ST [S.No.12A]. In this regard, it is stated that Entry No: 12A of the Notification No.25/2012-ST read with Section 102 of the Finance Act, 2016 [validating section] provides exemption for services provided to the Government. Relevant portion of th notification is as follows:- G.S.R.... (E)- In exercise of the powers conferred....., the Central Government, being satisfied th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... c. when provided to the Government only when the contract is entered prior to 1st March 2015. In the instant case, you have entered into agreement with the PWD only on 13.01.2016 for which you not eligible to claim exemption under the said notification. Accordingly, you are liable to pay the service tax dues along with interest and penalty. Para 3: Non-payment of Service tax - ₹ 3,61,978/- under Works Contract Service. On verification of your ST3 returns for the HYE September 2015 and March 2016, it is observed that you have constructed Govt. High School Building at Nagapattinam by entering into agreement with PWD vide agreement dt. 13.01.2016. But, you have not paid service tax on the contract receipt of ₹ 62,41,000/-. On enquiry, you have stated that you are claiming exemption under Notification No.25/2012-ST [S.No.12A]. From the plain reading of the notification, it can be seen that the exemption is available on certain services viz., construction, erection, commissioning etc. when provided to the Government only when the contract is entered prior to 1st March 2015. In the instant case, you have entered into agreement with the PWD only on 13.01.2016 for ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e service tax in respect of the works contract service other than commercial nature to the Government, local bodies, statutory authorities etc., with effect from 01.04.2015 and consequently to reimburse the service tax and interest thereon already paid by the petitioner to the 1st respondent in respect of the said nature of works contract service to Government, local bodies, statutory authorities or alternatively, to issue a writ of mandamus directing the respondents 4 to 15 to reimburse the service tax and the interest thereon that has already been paid in respect of the works contract service other than commercial nature rendered by the petitioner to the Government of Tamil Nadu during the period from 01.04.2015 to 30.06.2017 , within a time frame. 6. Further, having regard to the huge demand of ₹ 1.39 Crores, appellant has also sought for an interim injunction restraining the respondents 1 to 3 from insisting payment of service tax for the works contract service other than commercial nature rendered by the petitioner to the Government of Tamilnadu during the period from 01.04.2015 to 30.06.2017. Though, respondents, have entered appearance, and taken time, no counter af ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... it Court failed to appreciate that the respondents from the month of January 2018 itself sought time to get instructions in respect of taking up the matter for interim relief but failed to get instructions, thereby failed to honour their undertaking, and repeated seeking adjournment for the last 3 months and got adjournments for one reason or the other but, at the same time, the 3rd respondent is issuing notice to the appellant demanding a service tax of more than ₹ 1.00 Crores without sanction of law but by colorable exercise of power which if paid would wipe out his entire capital of ₹ 1.00 Crores forcing him to fail in all the ongoing works and hence the appellant begged the learned judge to consider the Misc. Petition seeking interim relief so as to protect the interest of the appellant from being ruined and hence the appellant was forced to seek interim relief which was rejected by dismissing the Misc. Petition seeking interim relief by the learned judge erroneously and hence the impugned order is liable to be quashed. b. that the writ Court itself was of the view that the service tax has to be reimbursed by the State and that the appellant is not liable ultimat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... order by the writ Court, is perverse. e. that the decision of the writ Court that if injunction is granted, it would run contrary to the statute, is patently erroneous and rendered without appreciating the pleadings and arguments of the appellants in this regard. f. writ Court failed to appreciate that balance of convenience and justice warrants grating of interim order restraining the respondents 1 to 3 from demanding any service tax in respect of the subject matter pending disposal of the writ petition. 9. Assailing the correctness of the order of the writ Court, it is the specific contention of Mr.N.Subramaniyan, learned counsel for the appellant that service tax was not included in the tender conditions and the same was not collected by the appellant from Housing Board / Government. But responding to the demand dated 31.01.2017, service tax was paid, to the 1st respondent and reimbursement sought for, is yet be granted. 10. Inviting the attention of this Court to the demand dated 30.01.2017 for payment of service tax under various heads of work, paragraph Nos. 1, 2, 3, and 4 and payments made towards service tax for the various works, which is evident from page Nos ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 04 Range Code 02 Major Head 0044-Service Tax Accounting Code Accounting Code Accounting Description Amount 00440410 Works Contract Services- Others Receipts 59742 Amount In Rupees ₹ 59742 Amount In Words Rupees Fifty Nine Thousands Seven Hundred And Forty Two Only BSR Code 0270626 Cheque Tender Date 28/02/2017 Challan No. 50150 Transaction Id 656696 Date Of Realization 28/02/2017 Mode Of Payment E-Payment Indian Overseas Bank Payment of Indirect Tax - Cyber Receipt Name Nandhini Constructions Assessee Code AABFN3313QST001 Location Code ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ization 03/03/2017 Mode Of Payment E-Payment Indian Overseas Bank Payment of Indirect Tax - Cyber Receipt Name Nandhini Constructions Assessee Code AABFN3313QST001 Location Code 630402 Commissionerate Code 63 Division Code 04 Range Code 02 Major Head 0044-Service Tax Accounting Code Accounting Code Accounting Description Amount 00440410 Works Contract Services 349496 00441493 Swachh Bharat Cess 12482 Amount In Rupees ₹ 361978 Amount In Words Rupees Three Lakhs Sixty One Thousands Nine Hundred And Seventy Eight Only ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng Board, has not been disputed. On the other hand service tax is paid by the appellant and reimbursement is sought for. If any amount has already been collected, then the appellant cannot retain, but to pay to the 1st respondent. But, in the case on hand, no service tax was collected, but the appellant is compelled to pay and thereafter, to get the same reimbursed. Appellant need not be mulcted with liability to pay service tax, which they have not collected from the Government / Tamilnadu Housing Board, and consequently, to pay the same to 1st respondent. Intention not to collect service tax from government for sovereign functions, is the main issue and that is why exemption has been granted earlier. 13. In the light of the above discussion, we are of the view that appellant has made out a prima facie case for interference with the order made in WMP No.1486 of 2018 in WP No.1185 of 2018 dated 28.03.2018. Hence, order impugned is set aside. Appellant is entitled for an order of interim injunction. Though on 20.03.2018 writ court directed the respondents to file counter by four weeks, so far, no counter affidavit has been filed. It is open to the parties to seek for an early dis ..... 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